RBI taking steps to deal with rupee fall: Finance Minister

NEW DELHI: The Reserve Bank is taking steps to deal with the sliding value of rupee against the US dollar, the Finance Ministry informed Parliament today.

“Measures have been taken to augment the supply of foreign exchange, which includes liberalisation of trade credit and External Commercial Borrowing (ECB) policy, increase in interest rates on NRI deposits and repatriation to India of proceeds of ECBs for rupee expenditure parked abroad,” Minister of State for Finance Namo Narain Meena said in a written reply to the Lok Sabha.

The rupee was trading at 51.37/38 a dollar in the afternoon trade today. It has depreciated against major international currencies since July 2011.

This year, the rupee has depreciated over 17 per cent so far. It had touched a historic low of 52.73 on November 22 from a peak of Rs 43.94 a dollar on July 27.

Meena said the fluctuation in rupee exchange rate is due to demand-supply mismatch.

“The main reason for depreciation of rupee against major international currencies is uncertain global economic environment, particularly unfolding of euro-zone sovereign debt crisis,” he added.

Meena said there was dollar liquidity crunch globally after US and several European countries and banks were downgraded by rating agencies.

“The cost of raising dollar resources for banks had gone up globally. The situation has eased a bit since then, though future scenario would depend on the international developments,” he said.